Citizens Property Insurance loan incentive program to get second, third look
Oct 22, 2012
The following article was published in The Florida Current on October 19, 2012:
By Gray Rohrer
Citizens Property Insurance Corp. board members voted unanimously Friday to contract with two separate companies for independent reviews of a hotly contested program that would use the state-run company’s surplus to lend money to private companies that take over its policies.
One review will be conducted by the Goldman Sachs financial firm, with the other company yet to be determined for the second review. The contracts will be for $200,000 each.
Citizens staffers recommended the third-party reviews earlier this month after lawmakers and elected officials like Chief Financial Officer Jeff Atwater and incoming House Speaker Will Weatherford suggested slowing down the project. Weatherford went further, saying the Legislature should be able to review the program, which proposes to provide $350 million in 20-year loans to companies that take out substantial amounts of policies for at least 10 years.
The criticisms of Atwater and Weatherford were among the more mild critiques, with Sen. Mike Fasano, R-New Port Richey, and Rep. Frank Artiles, R-Miami, decrying the program as a corporate giveaway. Artiles has even threatened to file an injunction to stop the program if it is implemented without Legislative consent.
Both reviews are to run for 90 days, creating a short timeline for Citizens to implement the program, which they hope will reduce its risk by $2 billion and potential assessments on Citizens and non-Citizens homeowners by $1.17 billion, by February so private companies will be able to determine their reinsurance costs ahead of the 2013 hurricane season.
Citizens board members also want a review of the existing program to move policies out of Citizens, which Gov. Rick Scott and some lawmakers say has become too large and carries too much risk with 1.4 million policies.
The existing program does not carry incentives for companies, but has seen significant results in recent months. The Office of Insurance Regulation has already approved more than 300,000 Citizen policies for takeout this year, and announced another 100,000 that can be removed in December.
Despite the success of the existing program, Citizens officials believe the incentive program is needed to target riskier policies and keep them out for longer than the current program.
View the original article here: http://www.thefloridacurrent.com/article.cfm?id=29870996